Web-based Systems



Web-based Systems

Introduction

Return on investment (ROI or return on investment), sometimes called yield or rate of return or profit rate means a financial ratio those measures: The amount of money gained or lost compared to the amount initially invested in an investment. In general, this ratio is expressed as a percentage rather than a decimal value, denotes the gain or loss of money as interest, profit / loss, gain / loss or even recipe / loss. To refer to the money, we use the terms' active, of capital, of the principal sum or acquisition value of the investment.

Discussion

When to Use and Calculate

The return on investment can be calculated for two types of decisions:

For investors, in the case of a choice between different products or financial investments. The investor will take into account the return on investment, as well as other indicators such as risk.

Within a company, in the case of a choice between different projects. The Company may determine in particular from the return on investment products or the most profitable projects, a priori or a posteriori.

How to measure?

The general formula for calculating the return on investment is as follows:

Return on investment (%) = (gain from investment - cost of investment) / cost of investment. Attention, calculation of return on investment does not consider the risk of each project. A much higher ROI on a project can also hide a rate much greater risk. This will be the investor to make a tradeoff between cost and potential risk (Fried lob & Plewa, 1996).

Features

The initial value of an investment does not always clearly defined monetary value, but to measure the ROI %, the initial value must be clearly established - and the justification of the same value.

The return on investment is the rate of profit or revenue (realized or not). ...